The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from exports. Which of the following theories prohibits such international trade?

Question

Quizplus · Accepted Answer

The main tenet of mercantilism was that it was in a country's best interests to maintain a trade surplus, to export more than it imported. The mercantilists saw no virtue in a large volume of trade. Rather, they recommended policies to maximize exports and minimize imports. To achieve this, imports were limited by tariffs and quotas, while exports were subsidized.

The Republic of Argonia, Owing to Its Vast Resources of Arable